Investment screening to be scaled back: WSJ

Germany is considering scaling back plans to ramp up government screening of Chinese investments, the Wall Street Journal said.

A decision to ease back from a planned foreign investment screening law had become likelier due to fears that scrutiny on Chinese investments could hurt Berlin’s efforts to revitalize Germany’s economy, the report said, citing unidentified people familiar with the plan.

The plan for the bill proposed giving the government powers to screen foreign investments for security risks, a German Ministry for Economic Affairs and Climate Action paper seen by the Wall Street Journal said.

Phot: Reuters

The bill would allow the government to review new types of greenfield investments, including quantum technology, sophisticated semiconductors, artificial intelligence and critical infrastructure, the Wall Street Journal reported, citing the ministry’s paper.

The government also sought to include a provision that would allow the screening of cooperation projects between German research institutions and foreign partners in critical areas.

No final decision on the plan has been made, but “both ideas will likely be dropped,” the report said.

A German government spokesperson declined to give a comment to the Wall Street Journal on the deliberations, but said: “Investment screening is designed to avoid risks to security and public order in Germany. At the same time, it is important to remain open to foreign investments.”

The country needs an economic turnaround in order to secure its geopolitical position, German Minister of Finance and Free Democratic Party head Christian Lindner said on Saturday last week.

In its World Economic Outlook report, the IMF cut its forecasts for German GDP by 0.3 percentage points for both years.

It is expecting 0.2 percent growth this year and 1.3 percent next year, the IMF report said.

These forecasts are below the estimates of 0.8 percent for this year and 1.5 percent for next year for the eurozone, showing that Germany has become a laggard in the bloc.

It was also the only major economy to suffer a contraction last year.

Lindner said Germany’s economic weakness has consequences for security and geopolitics.

“We need the economic turnaround, because in the end, economic strength is also a factor in geopolitics,” Lindner said at Additional reporting by Reuters